Tuesday, February 26, 2008

Power densities are a measure of the land required for both energy sources and energy users. The current infrastructure matches the small footprint of energy sources against the large footprint of energy users. With the drive toward renewable energy sources, this relationship is about to be reversed with consequences few people understand.....Read more

Sunday, February 24, 2008

History would be a very boring read indeed if nothing changed. Imagine reading about the Roman Empire if it had survived intact and more less untouched from Augustus onward. All that might be said is that the Pax Romana has been good for business and that any one day in the life of the empire has pretty much looked like any other for the past 2,000 years.

But, of course, that is not how human history has unfolded. It is chock full of wars, the rise and fall of empires and of whole civilizations, ravaging plagues, breathtaking discoveries, vast migrations, world-changing inventions and cultural evolution. So, it is a puzzle why so much emphasis is now put on the supposed inevitable continuity of modern industrial life. The argument goes that humans are so very clever that they have brilliantly overcome every resource and ecological constraint on their way to becoming the dominant species. And, now with our powerful new technologies we are poised to dominate the globe forever while adding to it the conquest of outer space. Perhaps every empire including the empire of modern man thinks along similar lines.

But a cursory study of history should lead us to conclude no such thing. Humans have squandered opportunities, let their ambition lead them to destruction, run out of natural resources, and despoiled the landscape beyond repair again and again. Human societies do not always triumph. They tend to rise and fall as if they had a natural life cycle.

This may seem all too obvious once you think about it. And yet, at present our modern society seems captive to a cult of continuity even as it touts the great change wrought by technology and predicts great changes ahead from that technology. It never occurs to those caught up in the cult of continuity that great change almost always means great peril! There is barely any mention of the possible vulnerabilities or even fatal side effects resulting from such technology. The Luddites are laughed at today as is Thomas Malthus who predicted starvation for the masses since food supplies were not supposed to keep up with population growth. These men saw peril where their compatriots only saw progress.

But history is all about discontinuity. Who would even bother to write the dull history of the untouched Roman Empire imagined above? In fact, reality has spawned myriad volumes of history over the past 20 centuries reflecting in part the great volume of discontinuity experienced by human societies.

Perhaps because much of the discontinuity of our time is far away from modern eyes we are missing the peril part of change. The depletion of the world's fisheries continues apace while few know that catches peaked in the late 1980s. The silent rape of the soil proceeds with barely a notice that billions of tons of topsoil slip away each year due to erosion. The world's vast water treatment facilities should tell us something is happening to the world's potable water; but such plants are rarely in the center of cities where everyone could see them and contemplate their meaning. Vast tracts of forest both in the tropics and in places such as Canada are being felled for fiber. But how many actually see it happening? And, if they did, would they understand its significance?

Those of us in wealthy countries often see only the "progress" end of such change. There are more and more goods available each year at generally lower prices. The trend has been going on for so long it hardly seems possible that it could slow down, much less come to a halt.

Here is why the cult of continuity must really be classified as a cult. The word "cult" in its simplest sense means a system of religious worship. In many cults nothing is more important than the acceptance of certain beliefs without the requirement of evidence. And, because cult members require no evidence (in the scientific meaning of the word) to confirm their beliefs, these members are remarkably immune to evidence that might also challenge their beliefs.

So there you have it. Anyone who has tried to argue a devout friend out of his or her religion knows that appeals to reason rarely succeed. So why should we be so surprised when those who are convinced that human progress always runs in the same direction as time cannot be persuaded by evidence to the contrary?

All of this has implications for how one argues the case for the unsustainability of modern civilization. It is true that people of faith, even devout faith, can lose that faith under extreme distress. The extreme distress is already here for many in poorer countries; and, it is bound to spread elsewhere over time without prompt action to change our course.

Therein lies the conundrum. How can one shake the faith of those devout acolytes of the cult of continuity before the hardships of their own day-to-day existence force them to adapt? Failure to shake that faith means we will be left with only palliatives after the crisis arrives.

Sunday, February 17, 2008

The history of the 19th and 20th centuries could fairly be characterized as the history of urbanization. Today, every culture is rife with stories of the trek from the countryside to the city in search of work, education, sophistication, power and money. To stay behind was to be condemned to a life of parochialism and poverty. Will the history of the 21st century be more of the same?

It's starting out that way. Every year countless millions continue to stream into the metastasizing boundaries of Shanghai, Bangkok, Jakarta, Dhaka, Calcutta, Lahore, Cairo, Lagos, Nairobi, Johannesburg, Rio De Janeiro, Caracas, and Mexico City. Countless millions more are crowding into the ever sprawling urbanized areas surrounding so-called world-class cities such as Tokyo, Singapore, London, Paris, Rome, Toronto, New York, Seattle, Chicago, Los Angeles, Houston and myriad other vibrant modern cities across the globe. The attraction of the city for the young has never been so strong. This migration has become like a howling wind that will blow back anyone who tries to walk in the opposite direction.

Yet the forces which have made all of this migration possible seem like they are coming to an end. The fabulous advances in food production of the last century are slowing. We are having a harder time keeping up with population growth. This is partly the result of a self-reinforcing loop in which more urban growth means more land for housing and infrastructure and the consequent destruction of fertile farmland needed to feed this growing population. The result of this and other factors has been that per capita grain yields which peaked in 1984 have actually declined. Yes, there is overall more food available; but the key figure--as anyone who has gone hungry can tell you--is food per person. Naturally, people eat things other than cereal grains. But for most of the world, cereal grains are the central source of food calories; some 80 percent of all calories eaten are in the form of grain products and the products of livestock fed on grains.

We face a litany of other problems as well: the overuse of underground and surface waters, the collapse of fisheries, climate change, deforestation, loss of biodiversity, toxic pollution, and the depletion of strategic minerals. In addition, the growth in world oil production appears to be stalling out. Yet, against this backdrop, waves of humanity keep washing into the world's cities.

It is like the momentum of the tides which take water further up onto the beach even as the gravitational force which brought that water there is waning. People continue to come into the cities despite all the challenges of doing so because the whole system--even as it frays at the edges--practically forces them to.

Those who are concerned about sustainability talk about making cities more sustainable. But that is an oxymoron. Cities have never been sustainable. They have always needed more from the land than the land under them could give. But the issue is more nuanced than that. On the one hand, living more densely in an energy-constrained world makes sense. It reduces travel for all purposes, economic and social. And, in the past people did live in walkable villages and towns. Some still do. But today, at least in North America, only those living in large cities can really do without a car.

On the other hand, the explosive expansion of urban areas is primarily driven by economic growth and rising population. These two trends will be called into question in the energy-constrained world that is emerging in the 21st century. Without cheap energy it will be difficult to keep food production and economic growth on its current upward path. And, even if the two continue to rise, they may not do so at a rate that satisfies the world's hunger for both food and energy.

But try encouraging people to stay put in their rural landscapes when the hope of a better life is all in the city. Part of the reason is that the rural landscape is being systematically decimated by city residents through soil degradation (due to industrial farming); voracious mineral extraction and its often toxic side effects; and the felling of forests for fiber and to clear land for more agriculture. Add to this the persistent underfunding of public infrastructure and services in rural areas.

The ideal among serious thinkers about sustainability is a more decentralized living arrangement than we currently have--and one that is much lighter on the land and the entire ecosphere, of course. But the continuing crush of people moving toward the world's cities may not stop anytime soon even in the face of declining energy supplies. In part that's because the alternative, the countryside, has been so damaged in many places that it offers no alternative at all for the teeming millions in the cities.

What this means is that we will be obliged to figure out how to make our cities, even our megacities, somehow work even as the challenges of climate change and resource depletion begin to hit us full force. At this date that seems an impossible task. Perhaps in the long run we will be able to make living in the countryside and its villages and towns attractive to most people again. For now we will have to do what we can to respond to the growing number whom the lure of the city is bringing within its borders every day.

Monday, February 11, 2008

People have been moving to the suburbs for decades to escape the supposed afflictions of the city: noise, crime, lack of privacy, air pollution, poor schools, high taxes, traffic congestion and a host of other maladies. In suburbia many of them found relief, that is, until enough people moved out with them and created urban problems all over again. This caused some to move even further out to what are now called the outer ring suburbs.

Though gasoline prices are rising, traffic congestion is increasing, commutes are lengthening, and the supposed advantages of suburban life are diminishing, suburbia continues to attract new adherents even as it maintains its powerful hold on those already living there. Can it be that there is something more basic going on than simply a dislike of the city?

Dave Cohen thinks so. Known for his work on The Oil Drum and now for the Association for the Study of Peak Oil & Gas-USA, Cohen believes there is an instinctual basis for our love of suburbia, one that may be hard to break through even as the cheap oil which has made suburbia possible disappears. He plans to do more research and to write about the topic in the future. But, when he mentioned it to me, I couldn't resist asking him a few questions and reporting on his preliminary findings.

We are creatures adapted to moving around, Cohen explains. The anatomically modern humans who appeared 1.7 million years ago on the plains of East Africa were designed for hunting and gathering. In short, they were designed for movement for the purposes of acquiring food and avoiding predators. And, move these early humans did, throughout Africa and much of Asia. They didn't have the technology to live in cold climates or they might have wandered further north as well.

Mobility is a trait so basic to humans "that nobody notices that it's there," he says. "It's totally automatic." Of course, there have been many modes of mobility throughout history, but nothing that could take the average person so far, so fast as the automobile. And, because of modern manufacturing techniques, such as the assembly line, those automobiles became affordable to the masses.

Our instinctive penchant for mobility, according to Cohen, meant that "everybody would drive and everybody did if they could afford it." Long before the arrival of the car, agriculture brought millennia of confinement to small villages, constricted rural landscapes, and urban centers. Then, suddenly, the car made it possible for the great mass of people once again to roam the landscape. As they did, they set about creating what Cohen calls the industrial suburban savanna. So instinctually attractive was this new savanna that "they built it out so the entire culture is structured around the automobile," he said. Only instinct would seem to explain why people would "transform an entire landscape to accommodate personal transportation [such as the car]."

Because this phenomenon is worldwide and not just seen in North America or Europe, Cohen thinks it demands an explanation. "A deep biologically rooted instinct got triggered by the advent of the car," he contends. While he recognizes that there is no way to "prove" his theory and that it therefore falls into the scientific definition of a "just-so story," he thinks the theory is a good point of departure for talking about the love affair the world has had and continues to have with suburbs.

One disadvantage to the automobile version of mobility is that it cuts way down on communication. It's hard to talk with a person in another automobile at 70 miles per hour no matter how close they are to you. At first, we tried to make up for this loss of voices with radios. We have recently tried to make up for it with cellphones. "What you get is the perfectly mindless combination of people driving around and talking on their cellphones," he says. In this case by "mindless" he means "instinctual."

Driving goes beyond simply foraging for food and other necessities. It is now mandatory if one wants to have a social life. We drive to visit people we know and travel sometimes to encounter ones we don't. It is this instinct for sociability that may be one of the keys to challenging the hold that suburbia has on the minds and instincts of so many. For example, many couples who have finished raising their children, so-called empty nesters, are now returning to the city for the enhanced sociability that it offers.

Cohen writes frequently about energy issues and especially about peak oil. He thinks that if the reluctance of people to leave the energy-intensive life of suburbia is instinctually rooted, we will not be able to get them to change their habits or their deployment in the landscape through merely rational appeals. Of course, the survival instinct may come into play if peak oil creates conditions which are desperate enough in suburbia.

But, in the meantime, perhaps the best way to encourage people to settle in more compact communities is to make those communities more richly social. Then, we would be pitting one instinct against another. And, that seems more like a fair fight.

Monday, February 04, 2008

Stunning new highs in some world commodity prices have catastrophists of all types tapping out SOS in their sleep. There was, of course, the rise of oil which started 2007 at $50 a barrel and rose above $100 on the first trading day of this year, an all-time high. Wheat which began 2007 at around $5 a bushel reached $10, another all-time high, before retreating slightly. Soybeans which started last year around $6.50 a bushel ended the year above $12 and went on to set an all-time high last month just above $13. And, gold, that quintessential barometer of fear, rose from about $640 an ounce to above $900 recently, shattering its old highs.

Not every commodity rose or rose by as much. But the general trend has many of those concerned about peak oil, biofuels, and the effects of climate change saying, "I told you so." There is certainly a lot to be worried about. And, there is a good case to be made that long-term policy choices concerning energy, biofuels and climate change are now colliding with the physical facts on Earth and leading to a vicious cycle of interlocking problems that can't be solve by doing more of the same.

Still, it is the peculiar mission of markets to make fools ultimately of all who predict them and all who interpret them. The soothsayers on Wall Street and the vast majority of commodity forecasters were caught by surprise by the moves mentioned above. Markets are social phenomena and as such, they represent the constantly changing opinions and activities of thousands and sometimes millions of participants--activities and opinions which can never be fully observed or assessed. That is why it is in the nature of markets to surprise. If everyone could have known early last year that the oil market would reach $100 by the first trading day of this year, they would immediately have bid it up to that price. But, price movements in markets are about things which are not known or which lie in the future and therefore cannot be known.

This is why it is dangerous to affix any particular meaning to any particular price, whether high or low. The reasons for the price of any commodity are as multifarious as the people whose activities influence them. Too often we think that news makes markets. But, in reality, most of the time it is markets that make news. Those who get paid to write about markets are expected to come up with some reason each day for the latest price movements of Citigroup, Hewlett Packard, junk bonds, gold or wheat. But how can these writers possibly know the reasons?

In addition, there is the cardinal rule of neoclassical economics: High prices bring on more supply or substitutes or both. The watchword among right-minded economists (that is, cornucopian ones) is that this too shall pass. And, that's where the argument starts. Those who've been preaching that there would come a day when high prices wouldn't pass--a day when resources really would be running out because adequate new supply can't be found or grown at any price and because ready substitutes are not available--those people are now saying that that day is here.

The problem is that these two sides are talking about different things. The economists are talking about markets and the professional worriers are talking about resources. It is possible for something to be relatively cheap, but still not be accessible to everyone who wants it. Ask those who lived through the Great Depression. But the coming difficulties, "the long emergency," as James Howard Kunstler styles it, will be one of shortage not glut. For the market fundamentalist, however, there is no such thing as a shortage; there is only price. Price is what balances supply and demand even if some poor souls will simply have to go without. (There is a shortage of yachts for all who would like them, the market fundamentalist might say, but not for all who can afford them.)

It is all too likely then that the skyrocketing prices predicted for oil, for example, of $300, $500 or even $1,000 a barrel will never materialize. Yes, many people will do without oil, or a least without as much oil as they would like. And, that means that the price of oil will not go up forever. That's because many oil consumers will simply drop out of the bidding with each successive price hike. And, ultimately the dropouts will halt the upward pressure on oil prices perhaps at levels far lower than $300. The economists have a polite term for this. They call it "demand destruction." What they don't want you to think about is that sometimes, perhaps this time, a lot of people will be demolished in the process.

The same process, unfortunately, may be unfolding for cereal grains and perhaps other critical commodities about which we currently do not worry. But no commodity will be a one-way street. There will be swings enough for the market players to stay engaged. And, when prices do come down, these players and their affiliated economists will point to the drop as proof positive that the market is working just fine--which if one is concerned only with markets and not with people will turn out to be true.

There is another consideration for both sides of the debate. In truth, most commodity prices appear to be below their inflation-adjusted highs even if you use the U. S. government's admittedly stingy methods for calculating inflation. The government's current method calculates wheat's all-time inflation-adjusted high as $28.25 a bushel in February 1974 ($6.35 in 1974 dollars). And, if you use the price of $3 a bushel in 1974 dollars--a level which wheat maintained almost all the time from the beginning of 1973 through 1975--the inflation-adjusted price today would still be $13.52. But the government intentionally underestimates the inflation rate to keep pension and social security cost-of-living adjustments down. To get around this John Williams of Shadow Government Statistics (subscription required) designed a calculator based on the old, pre-adjustment government methods for calculating inflation. That calculator puts the wheat price spike at $75.94 in today's dollars and the $3 a bushel floor at $36.34.

Calculations for all four commodities mentioned above are summarized in the table below:

What all of this suggests is that the catastrophists may, in fact, be a little bit early and that the cornucopian economists may be too optimistic, at least about the near term. While history doesn't ever exactly repeat itself--Mark Twain liked to say that it rhymes--commodity prices look like they have considerable room to run. And, that's even if they never make it to the practically airless heights suggested by figures emitted from the inflation calculator at Shadow Government Statistics.

But perhaps the most important indicator is not how high these commodities will get, but how low they will go once they fall back from whatever new highs they achieve. The real price of commodities has been going down for more than a century. This is because the race between technology and resource exhaustion has been been won decisively by technology. Whether that will continue is now in question.

One indicator will be to see not what new highs are achieved in various commodities in the coming years, but whether a new floor is established that is significantly above previous historical real prices. In other words, higher lows will be more indicative of our situation than higher highs which are usually a very temporary phenomenon.

Exceedingly high prices for commodities, especially for oil, could conceivably tip our fragile economy into a recession or even a depression. That would temporarily lower demand for commodities and thus lower prices. Many commodities would then appear to be in surplus as fewer and fewer companies or people would have the means to buy them. We could again experience what some of our parents and grandparents experienced in the last depression: great want amid seeming plenty.

But if the high prices that cause this (as yet hypothetical) depression are due to the fact that resource depletion is stealing the march on technology, we may not know this for some time. Higher real lows in commodity prices, however, may give us one clue.

The impetus under such extreme circumstances will be to try to boost consumption. And, with so much slack in the economy, it may work. But if we have come to the crossover point where depletion is outrunning technology, we may find any recovery short-lived.

All of this amounts to speculation, a sort of thought experiment in an attempt to answer the question which is the title of this piece. My answer to that question is as follows: Commodity prices do not speak for themselves. Their meaning is not self-evident, and therefore many voices take on the task of speaking for them. Of course, I may suffer the fate of so many others who have tried to forecast or explain the markets. But, if my thought experiment proves broadly correct in its outlines, we may be on the front edge of an economic and social storm that will destroy the conceits of market economics and cast us into a dark and difficult struggle to find a new way of thinking about our economic and social lives.